The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
GUMBERG ASSOCIATES - CHAPEL )
SQUARE, WATERWORKS PHASE II, )
) 2:20-CV-01661-CCW
WGW ASSOCIATES, NORTHTOWNE )
ASSOCIATES, and CANH ASSOCIATES, )
)
)
Plaintiffs, )
)
v. )
)
KEYBANK NATIONAL ASSOCIATION, )
AND MIDLAND LOAN SERVICES, )
WELLS FARGO BANK, N.A., DEUTSCHE )
)
BANKTRUST CO. AMERICAS, and
)
GUMBERG B-NOTE HOLDER, LLC, )
Defendants.
OPINION
Before the Court is Plaintiffs’ Motion to Remand to State Court. ECF. No. 52. For
the following reasons, Plaintiffs’ Motion is granted.
I. Background
Plaintiffs are the owners and operators of three large-scale shopping centers: Waterworks
Mall in Pittsburgh, Pennsylvania; North Huntingdon Square in North Huntingdon, Pennsylvania;
and Northtowne Mall in Defiance, Ohio (together, the “Shopping Centers”). Am. Compl., ECF
No. 51, at ¶ 1. Plaintiffs entered into a commercial mortgage-backed securities loan (the “Loan
Agreement”) with JPMorgan Chase Bank, National Association and Colfin Coram Penn Retail
Funding, LLC (the “Lenders”) to fund the Shopping Centers. Mot. for Prelim. Inj., ECF No. 24,
at 4; Am. Compl., ECF No. 51, at ¶ 9; see Loan Agree., Ex. A. to Am. Compl., ECF No. 51-1.
Defendant Keybank National Association is the master servicer and Defendant Midland Loan
Services is the special servicer of the loan underlying the Loan Agreement (together, the
“Servicers”). Reply Br. in Supp. of Mot. for Prelim. Inj., ECF No. 24, at 4–5; Am. Compl., ECF
No. 51, at ¶ 30–31.
Plaintiffs began this lawsuit by filing the Complaint in the Court of Common Pleas of
Allegheny County, Pennsylvania on October 23, 2020. Compl., ECF No. 38 (redocketed by the
Court as ECF No. 38 for docket clarity). The Complaint, and later the Amended Complaint, ECF
No. 51, alleges that Defendants harmed Plaintiffs by (1) initiating the “Cash Sweep Period”1 under
the Loan Agreement despite Plaintiffs’ contention that they could cure the trigger event; (2) failing
to reimburse Plaintiffs for tenant construction costs under the Loan Agreement; and (3) failing to
approve certain leases in a timely fashion and in accordance with the terms of the Loan Agreement.
See Compl., ECF No. 38, at ¶¶ 32–65; Am. Compl., ECF No. 51, at ¶¶ 79–147.
On October 26, 2020, Plaintiffs filed a Motion for Temporary Restraining Order and
Preliminary Injunction with the Allegheny County Court of Common Pleas, seeking to prevent the
Servicers from starting the Cash Sweep Period. Pls.’ Mot. for Prelim. Inj., ECF No. 39, at 14. On
October 30, 2020, the Servicers removed the action to this Court. Notice of Removal, ECF No. 1.
Both sides advised the Court that they did not seek discovery relating to the request for
injunctive relief. See ECF No. 36. On November 30, 2020, the Court held an evidentiary hearing
on the Plaintiffs’ Motion for Preliminary Injunction. See ECF No. 47. The Court denied Plaintiffs’
Motion for Preliminary Injunction the same day. ECF No. 48. The Court found that Plaintiffs
were unlikely to succeed on the merits of a breach of contract claim against the Servicers, because
1 The Cash Sweep Period is the period of time during which the Lenders retain the Plaintiffs’
Excess Cash Flow as additional collateral for the Loan Agreement. Loan Agree., ECF No. 51-1,
at § 1 “Cash Sweep Period.” Several conditions, enumerated by the Loan Agreement, trigger the
Cash Sweep Period. See e.g., Loan Agree., ECF No. 51-1, at § 1 “Cash Sweep Event.”
the Servicers are not parties to the Loan Agreement; rather, they acted as agents of the Lenders
who were not named as defendants at that time. See id. at ¶¶ 7, 65–72.
On December 8, 2020, eight days after the Court ruled on Plaintiffs’ Motion for
Preliminary Injunction, and 21 days after Defendant KeyBank and Defendant Midland Loan
Services filed their motions to dismiss, ECF Nos. 26, 28, Plaintiffs filed an Amended Complaint
that added the following Lenders and their Trustees as defendants: (1) the Registered Holders of
JPMBB Commercial Mortgage Securities Trust 2014-C19 Commercial Mortgage Pass-Through
Certificates, Series 2014-C19 (the “2014-C19 Trust”); (2) Registered Holders of J.P. Morgan
Chase Commercial Mortgage Securities Trust 2014-C20 Commercial Mortgage Pass-Through
Certificates, Series 2014-C20 (the “2014-C20 Trust”); (3) Gumberg B-Note Holder, LLC (the “B-
Note Holder”); (4) Defendant Wells Fargo, as Trustee of the 2014-C19 Trust; and (5) Defendant
Deutsche Bank, as the Trustee and current Holder of the A-2 Note. See generally, Am. Compl.,
ECF No. 51. Plaintiffs averred that Defendant Wells Fargo is a national banking association
domiciled in South Dakota; Defendant Deutsche Bank is a New York corporation with a principal
place of business in New York; and the B-Note Holder is a limited liability company organized
in Delaware. Id. at ¶ 25.
The Amended Complaint alleges that Plaintiffs Gumberg Associates, Waterworks Phase
II, WGW Associates, Northtowne Associates, and CANH Associates are limited partnerships
whose general partner is a Delaware limited liability company that is owned entirely by Ira
Gumberg, a Pennsylvania resident. Am. Compl., ECF No. 51, at ¶ 14–18. The Amended
Complaint alleges that Jill Gumberg, a New York resident, is a partner in several of the Plaintiffs.
Id. at ¶ 20.
Plaintiffs’ Motion to Remand argues that because Jill Gumberg is a partner in several of
the plaintiffs and she is a resident of New York, the partnerships of which she is a member are also
New York residents. See Mot. to Remand, ECF No. 52, at ¶ 14. Plaintiffs claim that remand is
required due to a lack of complete diversity, given that several of the plaintiffs as well as Deutsche
Bank, Trust 2014-C20 and Trust 2014-C19 are all New York citizens. See generally, Mot. to
Remand, ECF No. 52; Br. in Supp. of Mot. to Remand, ECF No. 53.
Defendants oppose remand, arguing that Deutsche Bank is a nominal party whom Plaintiffs
fraudulently joined in an improper forum shopping expedition after the Court denied Plaintiffs’
request for a preliminary injunction. Resp. to Pls.’ Mot. to Remand, ECF No. 61 at 1; Joinder,
ECF No. 62; Surreply in Resp. to Pls.’ Mot. to Remand, ECF No. 74; Joinder, ECF No. 98.
II. Legal Standards
A. Diversity
Plaintiffs seek remand based on the citizenship of Defendant 2014-C19 Trust, Defendant
2014-C20 Trust, and Defendant Deutsche Bank as Trustee for the 2014-C20 Trust. See Br. in
Supp. of Mot. to Remand, ECF No. 53, at 4. Defendant Deutsche Bank, the Trustee for the 2014-
C20 Trust, is a New York corporation with a principal place of business in New York, New York.
Am. Compl., ECF No. 51, at ¶ 27–28. Depending on the type of trust and the entity that was sued,
a trust’s citizenship is determined either by the citizenship of its trustee or the citizenship of its
beneficiaries. See Navarro Sav. Ass’n v. Lee, 446 U.S. 458, (1980); see also GBForefront, L.P.
v. Forefront Mgmt. Grp., LLC, 888 F.3d 29 (3d Cir. 2018); cf. Americold Realty Tr. v. ConAgra
Foods, Inc., 136 S.Ct. 1012 (2016). Because Defendant Deutsche Bank, a New York corporation,
is the Trustee for the Defendant 2014-C20 Trust, that was created under the laws of the State of
New York, see Am. Compl., ECF No. 51, at ¶¶ 26–28, Plaintiff has destroyed complete diversity
by adding Deutsche Bank, regardless of whether the citizenship of the Trustee or the beneficiaries
is controlling.
B. Joinder
There is a split of authority among federal courts regarding the proper analytical framework
to use when, as here, the plaintiff files an amended complaint as of right that adds a new non-
diverse defendant after the case has been removed to federal court. Some courts apply 28 U.S.C.
§ 1447 and some apply a fraudulent joinder analysis. See McDermott v. Careallies, Inc., 2:20-cv-
03496-KSH-CLW, 2020 WL 7022749 (D.N.J. Nov. 30, 2020) (discussing the split of authority);
Sussman v. Capital One, N.A., No. 14-01945(FLW), 2014 WL 5437079 (D.N.J. Oct. 24, 2020)
(same).
The friction occurs because Federal Rule of Civil Procedure 15(a) permits a plaintiff to
amend a complaint “once as a matter of course,” i.e, without leave of court, within 21 days of a
Rule 12(b) motion. See Fed. R. Civ. P. 15(a)(1)(A)–(B). That is what Plaintiffs did in this case.
Yet, 28 U.S.C. § 1447(e) states that “[if] after removal the plaintiff seeks to join additional
defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder,
or permit joinder and remand the action to the State court.” 28 U.S.C. § 1447(e) (emphasis added).
Some courts consider “seeking to join” as akin to a motion, such that § 1447(e) only applies to a
motion to join additional non-diverse parties, as opposed to an amendment as of right that does not
require leave of court. See e.g., Conover v. United Parcel Service, Civil Action No. 06-
1079(NLH), 2006 WL 3534157 (D.N.J. Dec. 7, 2006). Courts that decline to apply § 1447(e)
following amendments of right under Rule 15(a) instead consider Federal Rule of Civil Procedure
20’s joinder analysis to determine whether a plaintiff has fraudulently joined a non-diverse
defendant after removal. See e.g., City of Perth Amboy v. Safeco Ins. Co. of Am., 539 F.Supp.2d
742, 754 n.2 (D.N.J. 2008); O’Keefe v. Hess Corp., 2010 U.S. Dist. LEXIS 90470, at *31 n.9
(D.N.J. Sept. 1, 2010); Conover, 2006 WL 3534157, at *5 n.3 (noting, albeit in dicta, that had the
plaintiff amended the complaint as of right, the fraudulent joinder analysis would have applied;
but, where the plaintiff filed a motion for leave to amend instead, the statutory analysis under
§ 1447(e) applied). If the court determines that a non-diverse defendant has been joined
fraudulently, the court then ignores the citizenship of that defendant and retains jurisdiction of the
case. Hogan v. Raymond Corp., 536 Fed. Appx. 207, 210 (3d Cir. 2013).
“Most courts and commentators appear to embrace the applicability of Section 1447(e)”
where a non-diverse defendant is joined as of right. Sussman, No. 14-01945(FLW), 2014 WL
5437079, at *2 (unpubl.) (citing Dillar v. Albertson’s, Inc., 226 F.3d 642 (5th Cir. 2000); Mayes
v. Rapoport, 198 F.3d 457, 462 n.11 (4th Cir. 1999); McGee v. State Farm Mut. Auto. Ins. Co.,
684 F.Supp.2d 258, 261 (E.D.N.Y. 2009); Wallace v. Dolgen Midwest, LLC, No. 5:12-cv-2945,
2014 WL 4338899 (N.D. Ohio Aug. 29, 2014); Mersmann v. Cont’l Airlines, 335 F.Supp.2d 544,
556 (D.N.J. 2004); and Rule 15(a) Amendments and Removed Actions, 6 Fed. Prac. & Proc. Civ.
§ 1477 (3d ed.); see also, Dotson v. Elite Oil Field Servs., Inc., 91 F.Supp.3d 865 (N.D. W.Va.
2015) (citing Mayes, 198 F.3d at 462, n.11)); Randall Bevels v. Am. States Ins. Co., 100 F.Supp.2d
1309 (M.D. Ala. 2000); Davis S. Casey, Jr. and Jeremy Robinson, 1 Litigating Tort Cases § 7:9
(Aug. 2020). The Third Circuit has described the procedure in § 1447(e) as an “exception” to that
general maxim that federal jurisdiction is determined at the time of removal and as a means for the
court to “permit the destruction of subject matter jurisdiction.” Kabakjian, 267 F.3d at 212
(emphasis added).
Some procedural scholars recognize that discretion to permit an amendment under
§ 1447(e)
exists even when the amendment of the complaint ordinarily would
be “as a matter of course” under Federal Rule [of] Civil Procedure
15(a)(1). Thus, under Section 1447(e), plaintiffs may deprive the
federal court of jurisdiction by post-removal joinder of a non-
diverse party, but only if the federal court permits this result by
approving the joinder.
E.g., Wright & Miller, 14C Fed. Prac. & Proc. Juris. § 3739.1 (Rev. 4th ed. 2020). This court is
among those that have applied § 1447(e)’s analysis in this circumstance. See e.g., Pierchalski v.
Pryor, Civil Action No. 2:19-cv-01352-RJC, 2020 U.S. Dist. LEXIS 187520, at *5 (W.D. Pa. Oct.
9, 2020) (Colville, J.); see also, Tompkins Ins. Agencies, Inc. v. Sumner, Civil Action No. 16-
2217, 2016 U.S. Dist. LEXIS 78376 (E.D. Pa. June 15, 2016); Murphy v. United Fin. Cas. Co.,
Civil Action No. 15-4199, 2015 U.S. Dist. LEXIS 184631 (E.D. Pa. Sept. 17, 2015).
C. 28 U.S.C. § 1447(e) Factors
In deciding questions under § 1447(e), courts within the Third Circuit regularly apply the
factors set forth by the United States Court of Appeals for the Fifth Circuit in Hensgens v. Deere
& Co:
(1) the extent to which the purpose of the amendment is to defeat
federal jurisdiction; (2) whether plaintiff has been dilatory in asking
for amendment; (3) whether plaintiff will be significantly injured if
amendment is not allowed; and (4) any other factors bearing on the
equities.
833 F.3d 1179,1182 (5th Cir. 1987), accord City of Perth Amboy, 539 F.Supp.2d at 752–53; see
e.g., Pierchalski, 2020 U.S. Dist. LEXIS 187520, at *11. Under the Hensgens factors, a request
to amend is dilatory if “the purpose of plaintiff’s delay in seeking an amendment was to prolong
the litigation.” Kahhan v. Mass. Cas. Ins. Co., Civil Action No. 01-1128, 2001 U.S. Dist. LEXIS
18561, at *2 (E.D. Pa. Nov. 14, 2001). As to the fourth factor, courts consider judicial economy
and resources as a factor that bears on the equities. See e.g., Kahhan, 2001 U.S. Dist. LEXIS
18561, at *9; see also, Taylor v. GGNSC Phila., L.P., Civil Action No, 14-7100, 2015 U.S. Dist.
LEXIS 127255, at *22 (E.D. Pa. Sept. 23, 2015).
D. Fraudulent Joinder
Fraudulent joinder is an exception to the complete diversity requirement for diversity
jurisdiction. Morocco v. Hearst Stations, Inc., No. 2:16-cv-1083, 2016 U.S. Dist. LEXIS 112577,
at *4 (W.D. Pa. Apr. 24, 2016). Upon finding fraudulent joinder, a court can disregard the
citizenship of the fraudulently-joined non-diverse parties, assume jurisdiction of the case, dismiss
the non-diverse parties, and retain jurisdiction. In re Briscoe, 448 F.3d 201, 216 (3d Cir. 2016).
Federal courts apply the fraudulent joinder standard of their own circuit’s court of appeals. Weaver
v. Am. Home Prods. Corp., 294 F.Supp.2d 667, 672 (E.D. Pa. 2003). According to the Third
Circuit, joinder is only fraudulent if there is “no reasonable basis in fact or colorable ground
supporting the claim against the joined defendant, or no real intention in good faith to prosecute
the action against the defendants or seek a joint judgment.”2 Brown v. Jevic, 575 F.3d 322, 326
(3d Cir. 2009). “Whether the claims against the joined defendants are viable is, of course, a matter
of state law.” Weaver, 294 F.Supp.2d at 672.
In deciding whether joinder is fraudulent, federal courts must assume that the factual
allegations in the complaint were true at the time the complaint was filed. Batoff v. State Farm
Ins. Co., 977 F.2d 848, 851–52. But the court can look “beyond the face of the complaint” in
2 Perhaps a misnomer, “[t]he ‘fraudulent joinder’ doctrine does not require a showing of fraud as
the term is generally understood.” Selvaggi v. Prudential Prop. & Cas. Ins. Co., 871 F.Supp. 815,
818 (E.D. Pa. 1995). Far from asserting that the joinder constitutes fraud in the literal or criminal
sense, the term “fraudulent joinder” takes on a different and specific meaning: “where there is no
reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or
no real intention in good faith to prosecute the action against the defendant or seek a joint
judgment.” Abels v. State Farm Fire & Cas. Ins. Co., 770 F.2d 26, 32 (3d Cir. 1985).
determining whether joinder was fraudulent. In re Briscoe, 448 F.3d 201, 219 (3d Cir. 2006);
Stewart v. Ethicon, Inc., Civil Action No. 19-4776, 2020 U.S. Dist. LEXIS 50271, at *13 (E.D.
Pa. Mar. 19, 2020). The party asserting that a joinder is fraudulent has a “heavy burden of
persuasion” to prove that a plaintiff fraudulently joined a defendant. Boyer v. Snap-On Tools
Corp., 913 F.2d 108, 111 (3d Cir. 1990). Federal courts must also “resolve any uncertainties as to
the current state of controlling substantive law in favor of the plaintiff.” Id.
The timing of a party’s amendment can be circumstantial evidence of that party’s motive
and purpose for joining a non-diverse defendant. Davis v. Supervalu, Inc., Civil Action No. 14-
6505, 2015 U.S. Dist. LEXIS 14668, at *7 (E.D. Pa. Feb. 5, 2015). “When a plaintiff knows about
a nondiverse defendant’s potential liability at the time the complaint is originally filed but does
not include that person as a party, subsequent attempts to join that person as a party will be viewed
as an attempt to destroy diversity.” Davis, 2015 U.S. Dist. LEXIS 14668, at *7 (quoting Montalvo
v. John Doe I, No. 10-cv-2617, 2010 U.S. Dist. LEXIS 106143, at *3 (E.D. Pa. Oct. 5, 2013)).
III. Discussion
A. Statutory Analysis Under § 1447(e) Favors Remand to State Court
After considering the Hensgens factors, we conclude that they weigh in favor of permitting
joinder and remanding the case to state court.
First, it does not appear that the purpose of amending the Complaint to join the Lenders
was to defeat jurisdiction. Plaintiffs brought their original Complaint against only the loan
Servicers because they only interacted with the Servicers in connection with the loan agreement.
See ECF No. 53, at 6. However, the Court denied Plaintiffs’ Motion for Preliminary Injunction,
finding that they were unlikely to prevail against the Servicers on their breach of contract claims.
See Find. of Fact and Concl. of Law, ECF No. 48, at ¶ 65. After the Court denied Plaintiffs’
Motion for Preliminary Injunction, Plaintiffs then joined the Lenders. See Am. Compl., ECF No.
51. Had Plaintiffs sought to join the Lenders immediately after removal to federal court, such
timing might suggest improper motive. Instead, their amendment followed the Court’s ruling on
the preliminary injunction motion and ostensibly addresses a roadblock to their ultimate success
in the case. See Find. of Fact and Concl. of Law, ECF No. 48, at ¶ 65; Davis, 2015 U.S. Dist.
LEXIS 14668, at *8 (finding that plaintiff’s predominant motive was not to avoid federal
jurisdiction even though it joined the non-diverse plaintiff only nine days after removal because
plaintiff stated that it did not know the identity of the non-diverse defendant before removal and
“removal statues are to be strictly construed and all doubts should be resolved in favor of remand.”
(citation omitted)).
Second, Plaintiffs have not been dilatory in amending their Complaint. Plaintiffs filed their
Amended Complaint 46 days after their original Complaint, and 21 days after Defendants filed
their Motions to Dismiss the Complaint—within the timeframe for filing an amendment as of right
under Federal Rule of Civil Procedure 15(a). See Compl., ECF No. 1; Defs.’ Mot. to Dismiss,
ECF Nos. 26, 28; Find. of Fact. and Concl. of Law, ECF No. 48; Am. Compl., ECF No. 51.
Third, Plaintiffs are likely to be prejudiced if joinder is not allowed. Federal Rule of Civil
Procedure 15(a) recognizes the utility in permitting plaintiffs to amend the initial pleading after
the defendant’s first motion to dismiss, and it makes sense to afford Plaintiffs that opportunity
here. If Plaintiffs were to proceed in this action against only the Servicers for conduct performed
as agents of the Lenders, that would create a risk of parallel litigation and a race to a judgment to
bind the slower court through principles of collateral estoppel because the cases arise out of the
same transactions and events. See Davis, 2015 U.S. Dist. LEXIS 14468 at *8 (forcing the plaintiff
to litigate its claims in parallel fora when the claims arise out of the same events and center of the
same facts prejudices the plaintiff); see also, Kahhan v. Mass. Cas. Ins. Co., No. 01-cv-1128,
2001 U.S. Dist. LEXIS 18561, at *2 (E.D. Pa. Nov. 14, 2001).
Fourth, the equities favor remanding the case to proceed against the Servicers and Lenders
together. The case is still in its early stages and remanding the case to state court streamlines the
case, promotes judicial efficiency and prevents duplicative cases, resulting in less protracted
litigation.
For these reasons, the Hensgens factors favor permitting Plaintiffs to join the Lenders and
remanding the case to state court.
B. Fraudulent Joinder Analysis
The Court’s conclusion that remand is appropriate is the same under a fraudulent joinder
analysis. Taking the allegations in the Amended Complaint as true, and resolving uncertainties in
the controlling law in favor of Plaintiffs, Defendants have not met their heavy burden of persuasion
to show that Plaintiff’s amendment joining the Lenders was fraudulent.
1. Colorable Claims Against Defendant Deutsche Bank
Plaintiffs claim that Defendants wronged them in at least five distinct ways, by: (1)
unreasonably delaying approving commercial leases for the Shopping Centers; (2) initiating an
Excess Cash Sweep after JC Penney left one of the Shopping Centers; (3) withholding funds for
Plaintiffs to reimburse a tenant for tenant improvement expenses; (4) wiring Plaintiffs less than
their full approved budgeted operating expenses in November 2020, and then attempting to recall
that wire transfer; and (5) attempting to enforce a contractual guaranty against Ira Gumberg. See
generally, Am. Compl., ECF No. 51.
A detailed review of the Amended Complaint and Loan Agreement reveals that Plaintiffs
accuse the Agent, as defined by the Loan Agreement, of violating various contracts and harming
Plaintiffs, but that Agent acted through its agents, the Servicers. See Am. Compl., ECF No. 51, at
¶¶ 90, 108–112, 119, 125–147; Loan Agree., ECF No. 51-1, at 3, §§, 2.7.2(a), 5.1.20, 7.4.1, 7.4.2,
7.5.1, 9.3; see also Cash Management Agree., ECF No. 51-2, at § 3.4(a)–(l). Those obligations
fall to Defendant Wells Fargo, who, as the current A-1 Note Holder, is the Agent. See Am. Compl.,
ECF No. 51, at ¶¶ 24, 49. However, Defendant Wells Fargo performed its obligations as Agent
(and as Lenders’ agent) through its agents, the Servicers. See Loan Agree., ECF No. 51-1,
§ 10.27(a).
Plaintiffs’ Amended Complaint also accuses all of the Defendants of breaching the Loan
Agreement and committing tortious interference with business relationships. See Am. Compl.,
ECF No. 51, at Counts I & II. It is well-established that a principal can be held liable for its agent’s
torts and breaches of contracts that the agent carried out within the scope of its agency. See Banks
v. Peace of Mind Realty, 160829/2014, 2019 N.Y. Mics. LEXIS 4921, at *22–23 (N.Y. Sup. Ct.
Sept. 6, 2019). Therefore, it is possible that non-diverse Defendant Deutsche Bank could be held
legally responsible to Plaintiffs if Agent breached a contract or committed a tort in the scope of its
agency.
Under New York law, “[t]he essential elements of a cause of action to recover damages for
breach of contract are (1) the existence of a contract, (2) the plaintiff’s performance pursuant to
the contract, (3) the defendant’s breach of its contractual obligations, and (4) damages resulting
from the breach[.]” Junger v. John V. Dinan Assocs., Inc., 164 A.D.3d 1428, 1430 (N.Y. App.
Div. 2018). “To state a cause of action alleging tortious interference with contract, the plaintiff
must allege: the existence of a valid contract between it and a third party, the defendant’s
knowledge of that contract, the defendant’s intentional procurement of the third party’s breach of
that contract without justification, and damages. 106 N. Broadway, LLC v. Lawrence, 2018-04389,
2020 N.Y. App. Div. LEXIS 7434, at *12–13 (N.Y. App. Div. Dec. 2, 2020).
After reviewing the Amended Complaint, the Court cannot say with certainty that there is
no colorable ground for liability against Defendant Deutsche Bank, as the A-1 Note Holder and
principal in relation to the Agent’s performance of the functions of Agent under the Lon
Agreement. Accordingly, a finding of fraudulent joinder is not appropriate on that basis.
2. Plaintiffs’ Intent to Pursue Claims Against Defendant Deutsche Bank
Does Not Support Fraudulent Joinder
A finding of fraudulent joinder is also not appropriate because Defendants have not showed
that Plaintiffs lack a good faith intent to prosecute the claims against and join Defendant Deutsche
Bank in the judgment. The Court denied Plaintiff’s Motion for Preliminary Injunction after finding
that Plaintiffs were unlikely to succeed in their contract claims against Servicers because Lenders,
not Servicers, were parties to the Loan Agreement. Find. of Fact and Concl. of Law, ECF No. 48,
at ¶ 65. Eight days later, Plaintiffs filed an Amended Complaint which added the Lenders as
defendants to remedy that perceived issue. Am. Compl., ECF No. 51.
It is true that “when a plaintiff knows about a nondiverse defendant’s potential liability at
the time the complaint is originally filed but does not include that person as a party, subsequent
attempts to join that person as a party will be viewed as an attempt to destroy diversity.” Davis,
2015 U.S. Dist. LEXIS 14668, at *7 (quoting Montalvo v. John Doe I, 2010 U.S. Dist. LEXIS
106143 at *3). Here, Plaintiffs only ever interacted with Servicers, not the Lenders, with respect
to the Loan Agreement. See Reply in Supp. of Mot. to Remand, ECF No. 70, at 6. Because
Plaintiff filed suit against the parties that it interacted with in regard to the Loan Agreement, and
then realized the utility of also suing the Servicers’ principals after the Court pointed it out, the
Court finds that Plaintiffs’ joining the lenders in the Amended Complaint does not indicate a lack
of good faith. Because the Court finds that Deutsche Bank was not fraudulently joined, the Lenders
are appropriately joined in this case and complete diversity no longer exists. Therefore, remand is
appropriate.
IV. Conclusion
For the foregoing reasons, under both a § 1447(e) and a fraudulent joinder analysis, the
Court finds that remand to the Allegheny County Court of Common Pleas is appropriate in this
case.
An appropriate order will follow.
DATED this 10th day of February, 2021.
BY THE COURT:
/s/ Christy Criswell Wiegand
CHRISTY CRISWELL WIEGAND
United States District Judge
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